Decline in Xbox 360 Sales Dampens Good Microsoft Quarter
By Scott M. Fulton, III | Published April 26, 2007, 5:59 PM
In its quarterly report to analysts for its third fiscal quarter of 2007, Microsoft executives repeatedly stated much lower than expected Xbox 360 sales for the quarter. After selling as much as 1.8 million consoles per quarter last summer, the company sold only 500,000 consoles in the previous quarter to retailers.
Revenue for the Entertainment Division in the fiscal third quarter was down a staggering 21.5% annually, to $929 million; and the division posted a $315 million loss, though that's less of a loss than the $402 million posted during the same quarter last year. Microsoft CFO Chris Liddell told analysts to expect revenue for the Entertainment and Devices division for the fiscal fourth quarter to fall as much as 11%.
Just after the closing bell on the New York exchanges, Microsoft released a preliminary note on its performance for the first calendar quarter: It reported $14.3 billion in revenue, a gain of 32% over the same quarter a year ago, and net profit of $4.93 billion. That's a 65.5% annual gain, which sounds pretty astonishing, and trumpets will certainly blare today and tomorrow.
But as the company warned three months ago, it is deferring revenue from the previous quarter attributable to initial sales of Windows Vista to business customers. Exactly how much of that $4.93 billion number is deferred revenue won't be known until later tonight, though that's not stopping financial news sites from trumpeting the deferred gains as a milestone anyway.
One possible clue: The company declared $4.5 billion in unearned revenue for the quarter as cash flow from operations, and charged $6.1 billion as the cost of recognizing that unearned revenue. Hopefully we'll get the full story of that intriguing pair of line items.
5:42 pm ET April 26, 2007 - Microsoft CFO Chris Liddell gave the deferral number up front, in the interest of full transparency: $1.7 billion of that revenue number was deferred (pretty much the difference between the two figures about), meaning without the deferral, Microsoft's revenue growth was still 17%.
WHO FUKING CARES ABOUT A FUKING EXPENSIVE CONSOLE AS PS3??? SO FUK IT, People doesnt want a expensive console people!!! and let's face it, multimedia its great, i have a PSP and a Xbox 360 and a GameCube and i had a Super Nintendo Famicon(the japanese version of that crap and everything its in japanese) and YOU CANT LISTEN TO YOUR FAVORITE ARTIST WHILE PLAYING A GAME IN ANY OTHER CONSOLE THAN XBOX 360, that's what i love from it and it can also get connected to my pc and sony doesnt have that, the average user likes that people so wtf are you complaining about?? you know that the people in this forum its a lot more computer/consoles knowledger than them so fuk all of you niggas
Score: -1
|typical 360 owner...
Score: 0
|"It reported $14.3 billion in revenue, a gain of 32% over the same quarter a year ago, and net profit of $4.93 billion. That's a 65.5% annual gain, which sounds pretty astonishing, and trumpets will certainly blare today and tomorrow."
thats insane... i wish the company i work for could acomplish numbers like this
Score: 0
|Instead you can waste the day posting on the blu-ray.com forum all day. Your current count is up to 618.
You are pathetic.
Score: 0
|**************
**************
I guess if you have money just growing on trees in your backyard and want to waste the day away inside when you should be outside doing something.....then yes.....get a game console.
I say "hahahahahahaha" to Microsoft.
**************
**************
Score: 0
|crazy ppl...arguing over consoles like PC vs Mac, hehe.
I prefer Nintendo and my GC...but I'm not going to buy a Wii until it is maybe $75. It's a natively Widescreen GC!!!! That's it! They could have just released a wireless gyro controller for the GC...those goobers.
And now back on track. Go MS/Xbox360 GO! Oh, and my brother has a PS3...I am hoping he enjoys it. He gets access to all the Japanese games, hehe.
Score: 0
|Yep, nobody want's the 360 anymore. It's so last generation.
http://www.gamesindustry...tent_page.php?aid=24602
Not sure if it's because it's a crap console (noisy, unreliable and feature lacking), or because the PS3 is simply much better (abiet more costly).
Either way, people arn't buying it, and have moved on..
It's obvious it's not selling, as the shelves in my local stores are full of 360's, yet you can't buy a Wii anywhere..
Score: 0
|It's always shelves by your local stores that are full of 360's, i'd like to believe ya, but your too much like the old Iraqi minister of (mis)information.
Score: 0
|Yeah, nobody's buying the 360. Let me ask you this...when was the last time you saw a half-million people in one place? I went to the last Woodstock and that was only a quarter million and let me tell you, that was a lot of people. For double that to purchase a $300+ gaming system in 3 months is still an impressive feat, to be sure. You do have to remember that we are facing some tough economic times right now, regardless of what the government tells us, and some people simply can't quantify spending that much money on a gaming machine when gas prices and healthcare costs are through the roof. I wouldn't call the 360 a failure...not when they've already sold 10-million+ of them. Give it time, watch the trend, and then pass judgment.
Score: 0
|Well, Pdj79, I live in Indianapolis, and every Memorial Day weekend, we have a little festivity where we gather about a half-million people. And yes, if you imagined every one of those people owning Xbox 360s, you'd think, what a tremendous success it must be.
Then you come to realize all the devices and machines they probably all do own, and reality starts setting in. Say you're seated in Turn 2, and you think about subdividing everyone you see in the stands into video game owners and non-owners, and your mind starts playing with a kind of virtual pie-chart. You begin to wonder whether you could fit video game owners into Turn 1 alone.
You're right, though, this device is by no means a failure, especially with the lousy start it had. But you bring up a very important point: The economy is not as rosy as the upper-crust 1% make it out to be, and gasoline here has just returned to $3/gallon. That reality has to be going through the minds of the folks at Microsoft about now: How do we take this arguably "luxury" gadget and make it appealing to a broader base...when we're already losing money on a per-unit basis now?
-SF3
Score: 0
|Don't even bother get upset about that turd burglar. Mr. Sony cheerleader is too broke to afford any of thier equipment.
I just laugh at his nonsense.
The best thing you can do is insult his mother and chip away at his already low self esteem.
Score: 0
|OMG, could you get anymore up Sony's azz? LOL
Score: 0
|The racks or full of PS3s too.
Score: 0
|"Yep, nobody want's the 360 anymore. It's so last generation."
Yep, people stopped buying after they sold 11 million units. People stopped buying the PS3 before it even hit the 3 million mark. Damn, Sony sure showed Microsoft who's boss. Oh wait..
Score: 0
|Then you should you come to Europe if you really want to see some expensive gas prices. We pay here around 9 US dollar a galone.
Score: 0
|Microsoft have only shipped 11 million, there are 1.7 million unsold units in the retail chain.
Actual customer sales of the 360 are about 9.3 million. Many stores also count replacements as sales, so it's possible that another million of these are replacements for failures (as the 360 is so unreliable)
Score: 0
|source?
Score: 0
|A little birdie told him.
Score: 0
|I love how MS & Sony are both losing money like a river on their 360 and PS3. Both companies take a loss on every system they sell. MS is taking less of a loss, but still, Microsoft is saying it's XBOX division lost $315M. Sony is predicting losses in the Billions.
Meanwhile, sitting at home.. Nintendo comes out with thee Wii and..
http://wii.ign.com/articles/783/783712p1.html
1st Quarter they will report a 1.47 BILLION dollar profit, a 77% rise in profit since introducing a new console.
For all the Nintendo haters, have some business sense.. Nintendo has to be sitting at home throwing giant fracking parties in light of the news they keep seeing.
Score: 0
|Nintendo met the market with the Wii and now game developers are scrambling to get new titles out for a console nobody thought would make 3rd place.
The big news for Nintendo continues to be the DS. How long until we get 3 players in the mobile console market? Zune 360? X-Box 180? Honestly I think if Microsoft pushed into the mobile game market before realizing profits with the Zune and 360 it will finally sink that division. Divisions of a company consistently posting losses makes investors and stock holders unhappy no matter what the unit sales and overall market share are.
Score: 0
|LOL nice lib spin on that title.. the company posts 17% growth and you find the ONLY neg spin on the whole thing... You people LOVE negativity...
Score: 0
|Well, that's what attracts the readers. Let's face it: Microsoft does okay in their Quarter isn't an appealing title.
Score: 0
|It's scott...long time infamous MS hater, what do you expect?
Score: 0
|17% grown in the quater is more then "okay"...
Score: 0
|MS had predicted much more then that, though, as they were saying that the introduction of a new OS into the channel for builder partners would net tons of pre-commits. The reason why the XBOX is an issue is that it still netted a big loss, which kept them under a 20% growth. MS had predicted just blockbuster growth in Q4 because of Vista.. then Vista is late and OEM pre-commits are soft, still.. 17% growth is nothing to scoff at, but it makes them pay attention to what's going well and what isn't.
Score: 0
|i dont know why this @ssholes are anti microsoft, dumbsh!ts
Score: 0
|Nice spin guys.. nice spin...
Score: 0
|The machine isn't intended for gamers. Ultimately, the Elite has nothing to do with enhancing the gameplay experience; it's for multimedia wh***s. HDMI, a larger hard drive, new movies and TV content?
and here is your answer:
"Microsoft says the Elite isn't aimed at existing customers but for niche HD enthusiasts who still don't own an Xbox 360."
See you answered your own question is that not neat hey:) lol
Score: 0
|On the 360... duh. Everyone who will buy at $399 has already.
Score: 0
|Let's see...we have now had 3 separate articles describing the decline in sales of the Wii, the PS3 and the XBox in the quarter immediately following Christmas.
I guess to some of the folks here that must be amazing news.
To anyone else even vaguely familiar with buying trends, especially of games, it should come as a giant yawn!
Yup, the rate of buying games is lower the quarter after Christmas than in the quarter containing Christmas. DUH!
The really significant news would have been if any platform's sales increased the quarter after Christmas!
Score: 0
|I thought sales of the PS2 were up? :)
Score: 0
|Why would anyone buy a 360 now with the new version coming? Ever since they announced the 120GB HD and HDMI, the fanboys who just bought one were going nuts because thier 14 day return policy from Best Buy had elapsed.
Even the guys who bought one six months ago were complaining like they were never going to come out with a newer model. A couple said that "Microsoft better let people trade in their old ones for the newer model". They are insane.
At least the PS3 can take any standard notebook HD and they are relatively cheap compared to the ones you had to buy from Microsoft. They did some smart things with the PS3, especially forcing a BD player on everyone bacause it's what is driving the movie sales right now.
It would be the same if Sony announced a hundred dollar price drop on the PS3, but it wouldnt happen for two months. Sales would steadily decrease until the cheaper ones were available.
Score: 0
|Don't worry, the Elite is not very elite.
It's just as noisy as the regular 360, gets just as hot, still has the 90nm CPU, and will therefore suffer the same crushing reliability problems..
Even the added HDMI only makes it marginally better...
http://www.engadget.com/...ite-vs-classic-the-test/
http://gamepro.com/micro...s/features/109355.shtml
8 Reason's Why XBOX ELITE isn't ELITE?
1. Three 360s is one too many. Currently there are two Xbox 360 models available, and that's already a stretch. Yeah, it's about choice, but it's also about reducing confusion when presenting a prospective buyer with a product. Having three SKUs available to consumers makes it seem like Microsoft doesn't know what it wants to be. Hardcore gamers (like many of you reading this) are sure to do their due diligence when deciding on a game system, but keep in mind that hardcore gamers are the minority. Most gamers purchase a platform with very little research other than selecting which system supports the game(s) they want play.
2. It's still cheaper than the PS3. Cheap is a good thing. But for something to be considered "Elite," in theory it should probably also be the most expensive product on the market. Try as Microsoft may, when looking at price alone, PS3 still has the "elite" advantage when viewed by the affluent upper-class, the same class the $479 Elite is aimed at. Sure, the $499 PS3 just died and $299-399 Xbox 360 models will still prevail, but Microsoft's price advantage over the PS3 just got a whole lot smaller.
3. No wireless networking. C'mon. This is just inexcusable. Even the DS with its 12 year-old computing technology supports wifi. There's no excuse for what's being dubbed as "elite" not to include this inexpensive, widely used networking standard. Microsoft can pimp "choice" all they want on this one, but who doesn't want wi-fi? Sample: "No, I don't ever want wireless networking, so don't make me pay the $10 wholesale price of adding it." Preposterous.
4. The current 10 million 360 owners are getting the shaft. Microsoft says the Elite isn't aimed at existing customers but for niche HD enthusiasts who still don't own an Xbox 360. Fair enough, but didn't Microsoft just get done telling existing 360 owners that bigger hard drives and HDMI video were unnecessary? Why the sudden s*** in philosophy? Even new Elite owners may be getting the shaft as Microsoft will continue to optimize all Xbox Live Marketplace content for the 20GB hard drives, possibly making the Elite's 120GB drive a moot point. And by further segmenting the Xbox 360 platform, no one version benefits as game developers must consider each when developing games and testing hardware. The largest common denominator typically wins.
5. It will still be really loud. By not including a more efficient, cooler-running 65 nanometer processor, we assume the Elite will continue to pump out an irritating racket when turned on, primarily due to its noisy cooling fan. Usually, loud-running consumer electronics are more akin to discount products, not the high-class "elite" as the name implies. This will totally ruin our experience while we drink Cristal and listen to Vivaldi (yes, we're audio snobs).
6. No HD-DVD bundle. Is the Elite trying to be a multimedia device or not? Not including an HD-DVD drive just feels underdeveloped, and something Microsoft could have used to juice up excitement for the Elite. Of course, we can't help but suspect that the increasing popularity of Blu-ray had something to do with the decision to exclude HD-DVD this time around. Furthermore, the add-on drive will not be released in black for Elite owners still wanting HD-DVD support. That'll look real classy on your entertainment center; the black-and-white cookie look is so in this year.
7. Someone tell Microsoft that white is the "new black." Sure, Microsoft needs to differentiate from ghostly white Wiis and pastel-colored Apple products, but white -- not black -- is where the good stuff is right now in consumer electronics. Microsoft wisely went with white the first time around, so why the change without letting Elite owners decide on a color? And don't even try to sell a monochrome variation at a premium. Since when did I have to pay more for a black car?
8. The machine isn't intended for gamers. Ultimately, the Elite has nothing to do with enhancing the gameplay experience; it's for multimedia wh***s. HDMI, a larger hard drive, new movies and TV content? Great. Remind me why the gamer in me cares? How will the Elite improve my games? From a game saving and demo download standpoint, a 20 GB hard drive is more than enough (hint: you were right the first time, Microsoft). After all, despite whom Elite is being pitched to, gamers are the ones really buying the product.
The only thing "elite" about Microsoft's new Xbox 360 is its price. At $480, it's just $20 shy of the once-available, now-defunct 20GB PS3. Shedding the contrarian in me, the extra hard drive space and bundled HDMI support (including cable) is nice from a non-gamer standpoint. DVD upscaling is appreciated too. But as a gamer, it's hard to get excited about the Elite. And this isn't to say it won't sell; we just wish it was selling "more" to gamers.
Score: 0
|I would not say HD-DVD or Blu-Ray are "driving movie sales". Even at the 1 million movies sold mark that Blu-Ray claimed recently it pales in comparison to first week DVD sales of multiple movies over the last year.
The high availability of Blu-Ray players is due to them being built into the PS3. This has not turned into a major drive in sales just yet.
Score: 0
|Stupidity at its best. Nobody is forcing you to buy an Elite if you don't think it is "Elite." They are not twisting your arm to buy it. You can always buy the $400 or even the $300 model. It's called options. Something the Sony fans wouldn't know about. It is amazing how people can bash a company for giving the consumer choices, and praise a company for taking away choices. Am I the only one that sees the ignorance in this?
Score: 0
|He does have some good points.
Besides, they got the name wrong. Elite carries a certain weight and meaning and most people blindly buy in to that. The vast majority of die-hard gamers, geeks, nerds and alike, will probably read the specs and reread them again trying to figure out why it says Elite on the box.
Score: 0
|Are you kidding me? Those are the 8 dumbest, most insignificant (and sometimes just outright DUMB) reason I've ever seen in my life!
It's not elite because it's cheaper then the PS3? LOL that's a great one right there!!
Score: 0
|Nice numbers... 17% growth on a established corp is amazing...
Score: 0
|thats what i am saing... 17%... thats better then alot of companys will ever do
Score: 0
|